Providing for Rewards to Informers of Violations of Internal Revenue and Tariff and Customs Laws

July 15, 1960 DOF FINANCE REGULATIONS NO. 001-60 PROVIDING FOR REWARDS TO INFORMERS OF VIOLATIONS OF INTERNAL REVENUE AND TARIFF AND CUSTOMS LAWS Pursuant to the provisions of Section 1 of Republic Act No. 2338, the following regulations prescribing the manner of giving and receiving of information, the qualifications of informers, and the manner of payment of rewards to informers of fraud upon or violation of the Internal Revenue and the Tariff and Customs Laws are hereby promulgated: SECTION 1. Who May Qualify as Informers for Reward. Section 1 of Republic Act No. 2339 provides that (a) An informer must not be an internal revenue or customs official or employee, or other public official; and (b) He must not be related within the sixth degree of consanguinity to an internal revenue or customs official or employee, or other public official. This means that the father, mother, children, grandchildren, grandfather, grandmother, brothers, sisters, aunts, uncles, nieces, nephews, first cousins and second cousins of internal revenue and customs officials and employees or other public officials cannot qualify as informer. (c) In case the degree of relationship between the informer and the internal revenue or customs official or employee or other official is in issue, the matter shall be jointly resolved by the Commissioner of Internal Revenue or the Commissioner of Customs, as the case may be, and the Solicitor General. (Ibid) SECTION 2. Form and Contents of the Information. The information shall be in the form of a sworn statement given voluntarily and shall state definitely the facts of acts constituting the fraud upon or violation of the Internal Revenue or the Tariff and Customs Laws (as defined in section 1, Republic Act No. 2338). ITAaCc The information must also state the name and address of the taxpayer or importer or exporter (if known) committing the same, the exact or approximate date or period when the fraud or violation was or will be committed, and the names and addresses of witnesses, if any. The sworn statement may be substantially in the attached form. Any document, records or books, or copies or excerpts thereof, which may serve as evidence of the fraud or violation shall be submitted with the sworn statement. If the informer does not have possession or control of such documents, records, or books, but he has knowledge of the person who has the custody, possession or control thereof, or the place where they are kept, he shall state in his sworn information the names and addresses of such person and/or the place where such documents, records and books are kept. SECTION 3. Kinds of Information Entitled to Reward. In order to entitle an informer to a reward, his information must not yet be in the possession of the Bureau of Internal Revenue or the Bureau of Customs nor shall it refer to a case of fraud or violation already pending or previously investigated or examined by the Commissioner of Internal Revenue or the Commissioner of Customs, or any of their deputies, agents or examiners, as the case may be, or by the Secretary of Finance or any of his deputies or agents. (Section 1, Republic Act No. 2338) In case the information given is not entitled to reward, the informer shall be advised immediately of such fact. SECTION 4. Result of the Information Which Deserves Rewards. In order to entitle an informer to a reward, the information given by him must lead to or be instrumental in the discovery of the fraud upon or violation of any of the provisions of the Internal Revenue or Tariff and Customs Laws, and results in the recovery or collection of revenue, surcharges and fees and/or the conviction of the guilty party and/or the imposition of any fine or penalty or the collection of compromise in case of amicable settlement. (Section 1, Republic Act No. 2338). EAaHTI SECTION 5. To Whom Information Shall be Given. On frauds upon or violations of any of the provisions of the Internal Revenue Laws, the information may be given either to the Secretary of Finance, or the Commissioner of Internal Revenue, or to the Regional Director, or to the provincial or city revenue officer, or to their assistants in case of their absence or incapacity. On frauds upon or violations of the Tariff and Customs Laws, the information may be given either to the Secretary of Finance, or to the Commissioner of Customs, or to a collector of customs, or to the Coordinator for Security, or to the Chief of the Port Patrol Division (in case the information is given in Manila), or to their assistants in case of their absence or incapacity. If the information is not given to the Secretary of Finance, the officials mentioned above who may have received the information shall forward to the Secretary of Finance a copy of the same on the very day of receipt thereof. Other law enforcement agencies of the Government may take cognizance of an information provided that such information shall be received and acted upon in compliance with the requirements of these regulations. If action is to be taken by such law enforcement agencies of the Government based on such information, they should advise the Secretary of Finance or the Commissioner of Internal Revenue or Customs, as the case may be, before or simultaneous with the action taken. SECTION 6. Information to be Recorded in an Entry Book. Any information received must be entered immediately in a confidential entry book provided for the purpose by the official to whom the information is given directly, and the entries shall be consecutively numbered in the order of time the information is received. The individual entries must indicate the day and time the information is received, the name and address of the informer, the name and address of the person denounced, the names and addresses of witnesses, if any, the particular importation or exportation reported, nature and/or subject-matter of the information given and list of records, documents and books submitted, if any. The sworn information or statement received shall be given the corresponding entry number which appears in the entry book. The sworn statement shall be properly stamped with the official date stamp of the custodian of the confidential entry book and shall bear his signature or initial and the exact time it is received. The informer shall retain a stamped, timed and signed or initialed copy of his sworn statement which shall serve as his identification or evidence that he is the informer. There shall also be entered in this book at the close of each business day a certification by its custodian as to the number of information received and entered; and, if no information is received on the day, that fact shall also be certified and entered. In case the information filed by an informer requires urgent action and its immediate posting in the entry book could not be made, the official taking action on the information must report that fact immediately after the termination of his action to the Secretary of Finance, or to the Commissioner of Internal Revenue or to the Commissioner of Customs, or to the head of the agency, as the case may be, for reward purposes. SECTION 7. Action to be Taken on the Information. Informations given in accordance with these regulations shall immediately be the subject of a discrete investigation or surveillance and proper action taken based on the findings. A complete report of the action taken including the disposition of the subject matter of the information shall be submitted to the Secretary of Finance, or the Commissioner of Internal Revenue or Customs, as the case may be upon termination and final settlement of the case. SECTION 8. Frauds Upon and/or Violation of the Internal Revenue Law. The following are some of the frauds and/or violations commonly committed against the Internal Revenue Laws: 1. Underdeclaration of sales. 2. Underdeclaration of income. AHcDEI 3. False entries in books of accounts. 4. Underdeclaration of quantity of raw materials and output. 5. Underdeclaration of value of property, tangible or intangible. 6. Non-issuance of receipts or invoices. 7. Inclusion in payroll of non-existent employees. 8. Inflation of salaries of employees. 9. Inflation of cost of raw materials. 10. Concealment by taxpayer of his real tax status. 11. Smuggling. 12. Removals of articles subject to specific tax from the place of production without prepayment of tax, such as liquors, fermented liquors, distilled spirits, cigars, cigarettes, etc. 13. Inexistent deductions from gross income. 14. Removal of logs from the cutting area without pre-payment of forest charges or logs transported without auxiliary invoices. 15. Misclassification of products by manufacturers. 16. All kinds of misrepresentation to evade tax. SECTION 9. Frauds Upon and/or Violations of the Tariff and Customs Laws. The following are some of the frauds and/or violations commonly committed against the Tariff and Customs Laws: 1. Unlawful importation or exportation of articles into or from the Philippine port or place except a port of entry, or smuggling. 2. Transfer to any vessel or aircraft of cargo unladen contrary to law prior to the arrival of the importing vessel or aircraft at the port of destination. 3. Unloading of any port of the cargo of vessel or aircraft arriving from abroad before the arrival at the vessel's or aircraft's port of destination and without authority from the proper customs official. 4. Fraudulent concealment or removal of any article from any private or public warehouse under customs supervision. 5. Importation or exportation, whether effected or attempted, of article contrary to law, which includes Central Bank Circulars, Department of Commerce Regulations, Producers Incentives Board Permits, etc. 6. Failure to include in a manifest articles found on any vessel or aircraft, a manifest therefor being required. 7. Not specifying imported articles in the invoice or entry, including all other articles of packages purportedly containing articles similar to those declared in the invoice or entry. 8. Consummated, frustrated, or attempted importation or exportation of articles without going through a customhouse, which is another form of smuggling. 9. False declaration in an invoice, affidavit, or other document executed by the owner, importer, exporter or consignee concerning the importation or exportation of an article. 10. Any other fraudulent practice or device by means of which article was entered through a customhouse to the prejudice of the government. 11. Unlawful navigation of unregistered vessels. 12. Unloading of cargo of a vessel before arrival at a port of destination. 13. Unjustified unloading of cargo of a vessel at improper time or place after arrival. aESICD 14. Bringing of unmanifested arms, explosives or war equipment. SECTION 10. Payment of Reward. If revenues, surcharges or fees, or fines and other penalties, or compromise are finally collected as a result of the information given in accordance with the law and regulations, the Secretary of Finance or Commissioner of Internal Revenue or Customs, as the case may be, shall advise the informer that he is entitled to reward. Within thirty days from receipt of the notice, he must present to the Secretary of Finance or Commissioner of Internal Revenue or Customs, as the case may be, his formal claim for reward, stating among others, name, address and residence certificate of informer, date the information was filed, nature of the information, etc. The warrant or check covering the reward shall be delivered by the Commissioner of Internal Revenue or Customs, as the case may be, to the informer personally or to his authorized representative or shall be sent to the informer by registered mail with return card. The informer or his duly authorized representatives shall sign for its receipt of the warrant or check in case of personal delivery or the informer shall sign the registry card in case of registered mail and to surrender his copy of his sworn statement in either case. Claims for reward under informations filed with law enforcement agencies of the government shall be filed with such agencies who shall submit the claim to the Secretary of Finance or the Commissioner of Internal Revenue or Customs, as the case may be, together with their report and needed documents required herein for evaluation and approval. SECTION 11. Amount of the Reward. The informer shall be rewarded in a sum equivalent to twenty-five per centum of the revenues, surcharges or fees covered and/or fine or penalty imposed and collected and/or the amount agreed upon and collected as compromise. (Section 1, Republic Act No. 2338) If no revenue, surcharge or fees are actually recovered or collected, the informer shall not be entitled to a reward. SECTION 12. Funds from Which Rewards Shall be Paid. The reward authorized under Republic Act No. 2338 shall be paid out of the revenues, surcharges, compromises, fines and penalties collected and accounted for as a result of the information furnished by the informer. (Section 1, Republic Act No. 2338) SECTION 13. Conflicting Claims for Reward. Where there are two or more informers in the same case, the one who gave the information in full satisfaction of the conditions herein outlined shall be entitled to the reward. In the event that each informer meets all conditions fully, the informer who first furnished the information shall be entitled to the reward. In order that the reward may be paid to the proper person, the identity of the informer must be duly established. SECTION 14. Identity of Informer to be Kept Confidential. Except when the information is proven to be malicious or false, the identity of the informer shall be kept confidential at all times either before or after termination of the case and shall not be disclosed to unauthorized persons, especially to the taxpayer or importer or exporter, without the informer's consent. Any government official or employee who maliciously reveal the identity of any informer without his consent shall be subject to severe disciplinary action. (Section 2, Republic Act No. 2338) SECTION 15. Approval of the Secretary of Finance Necessary to Payment of Reward. In no case shall any amount be paid to the informant without prior approval of the Secretary of Finance. SECTION 16. Action in Case of False or Malicious Information. Should the information later turn out or be proved to be false or to have been made only for the purpose of harassing, molesting or in any way prejudicing the person denounced, the latter shall be entitled to any action, criminal or civil, as the facts may warrant. (Section 2, Republic Act No. 2338) SECTION 17. Effectivity of These Regulations. These regulations shall take effect upon approval by the Secretary of Finance and after fifteen days following the completion of its publication in the Official Gazette . HATEDC TIMOTEO Y. ASERON Actg. Commissioner of Customs MELECIO R. DOMINGO Commissioner of Internal Revenue Approved: July 15, 1960 DOMINADOR R. AYTONA Secretary of Finance ATTACHMENT REPUBLIC OF THE PHILIPPINES Department of Finance Bureau of Internal Revenue Bureau of Customs Manila Entry No. ________________ ________________________ (Bureau or Office) REPUBLIC OF THE PHILIPPINES ) BUREAU OF INTERNAL REVENUE ) BUREAU OF CUSTOMS ) ss Manila ) AFFIDAVIT I, ___________________________, ___________ years of age, married/single, and a resident of ____________________________________, after having been duly sworn, depose and say: 1. That I am not an internal revenue or customs official or employee, or other public official; 2. That I am not related within the sixth degree of consanguinity to any internal revenue or customs official or employee, or other public officials; 3. That I am related to ____________________ as my ______________ (relationship) who is a __________________________________ (customs/internal revenue/or other public official) 4. That I hereby furnish the information that _______________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ (State definitely and specifically the facts constituting as grounds for the information and frauds upon or violations of the internal revenue or customs laws, either contemplated or already effected.) 5. That to the best of my knowledge and belief, this information is not yet in the possession of the Bureau of Internal Revenue or the Bureau of Customs; nor does this refer to any case of fraud or violation already pending or previously investigated or examined by any official or employee of the said Bureaus or of the Department of Finance; 6. That this information is given voluntarily and not for the purpose of harassing, molesting or in any way prejudicing any person whatsoever; 7. That I request that this information be held strictly confidential; and, 8. That I hereby reserve my right to claim for reward under Republic Act No. 2338. FURTHER AFFIANT SAYETH NONE. _______________________ (Affiant) SUBSCRIBED AND SWORN to before me this ____ day of ____________ 196__, affiant having exhibited to me his Residence Certificate No. A-____________, issued at _________________________, on ___________________, 196__. EDCTIa _______________________ Notary Public or official authorized to administer oath